New York, NY, United States (4E) – Burger King Worldwide Inc. is holding discussions with Tim Hortons Inc. to acquire the Canadian coffee-and-doughnut seller, in a deal called tax inversion that will move the U.S. hamburger chain’s base to Canada, according to sources with knowledge of the matter.
The transaction would create a new holding company, one of the sources said, saying that the takeover would create the world’s third-biggest quick-service restaurant provider.
The deal between the two companies is likely to be struck soon, though additional details about the timing is yet to be learned, according to one of sources. Both restaurant companies have a combined market value of around $18bn.
Inversion deals allow companies to move to a lower-tax jurisdiction, with companies able to save money on foreign earnings and cash stashed abroad, and in some instances make their overall corporate tax at lower rate.
Ontario, Canada-based Tim Hortons has enjoyed high margins in the coffee chain segment, an area that U.S. fast-food giants have raced to get a piece of the market share. Burger King has been introducing more coffee products to its menus, and has partnered with Seattle’s Best Coffee to help in its effort.